Australian shares finish flat for March

Sally Rose

Despite the promise of the best February earnings season in five years the Australian equity market has finished March flat having only just edged ahead over the quarter.

Fund managers remain cautious about the outlook.

The benchmark S&P/ASX 200 Index added 27.9 points, or 0.5 per cent, on Monday to 5394.8, while the broader All Ordinaries Index gained 0.5 per cent to 5403, as Reserve Bank of Australia data showed private sector credit grew 0.4 per cent in February.

In March the ASX 200 edged up 0.1 per cent, while the All Ords eked out less than a 0.1 per cent gain led by the big four banks. Commonwealth Bank of Australia added 4 per cent to $77.44 in March, while Westpac Banking Corporation rose 3.9 per cent to $34.56. ANZ Banking Group gained 3.7 per cent to $33.06, and National Australia Bank added 2.7 per cent to $35.46.

Westpac Banking Corp and ANZ Banking Group have been the biggest drivers of the market this calendar year-to-date. After starting the year down 3.3 per cent in January the top 200 stocks have finished the March quarter up 0.5 per cent.

"Unfortunately the headlines that have held back the market's growth in the first quarter are likely to continue into the second quarter," Zurich Financial Services senior investment strategist Patrick Noble said.

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"There has been no resolution to the geo-political tensions in Russia. It is yet to be seen if a spate of weak economic data in the US really was due to extreme weather and will improve. And a series of data releases in China over the past month indicate its target of 7.5 per cent annual growth will not be achievable," Mr Noble said.

After mostly recovering from a flash crash in early March the spot price for iron ore, landed in China, ended the month at $US112.30 a tonne down from $118.10 at the end of February. "A pullback in Chinese financial markets has caused some fall-out in commodity prices ," Mr Noble said.

Despite delivering impressive quarterly production reports and interim results in the march quarter the biggest miners have fallen back. Resources giant BHP Billiton fell 2.7 per cent to $36.47 in March while main rival Rio Tinto lost 3.6 per cent to $63.55.

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Among other major stocks that held back the market's rise over March Woolworths fell 0,4 per cent to $35.72, Wesfarmers, owner of Coles, lost 3.6 per cent to $41.19 and Telstra Corporation was flat at $5.08.

The official Chinese manufacturing purchasing managers index is expected to show the growth in factory activity is slowing down on Tuesday while the RBA is tipped to keep interest rates on hold at their record low 2.5 per cent.

"One of the reasons the RBA cut rates last year was due to weak China manufacturing PMI readings so it is unlikely they will consider raising rates again until those readings improve," HSBC head of Asia-Pacific rates research Andre De Silva said.

Childcare network G8 Education was the top-performing stock in the ASX 200 for the quarter, climbing 22.2 per cent over the past month to a record high $5.07 after it swooped in to buy 91 centres from rival Sterling Early Education for $228 million after its plans to float fell over.